Former Exit Port for a Wave of Cubans Hopes to Attract Global Shipping

Scissors were kept at the ready for a ribbon-cutting ceremony on Monday at the renovated port of Mariel, on the northwestern coast of Cuba.

Todd Heisler / The New York Times

By DAMIEN CAVE

January 27, 2014

MARIEL, Cuba — The images of desperate refugees crammed onto boats have defined this bay outside Havana for decades. About 125,000 Cubans left from here in 1980 after Fidel Castro, facing growing discontent, announced that anyone who wanted to leave should just go to Mariel and get out.

But on Monday, Raúl Castro, Cuba’s president, stood alongside the president of Brazil, Dilma Rousseff, to unveil a new Mariel: a state-of-the-art port that both leaders said would lead to a new era of commercial integration, connecting Cuba and the world.

The terminal is “a transcendent project for the national economy,” Mr. Castro said, standing by towering container lifts adorned with Cuban flags. He added that the port and the adjacent development zone, where foreign companies will enjoy tax breaks and other advantages, “are a concrete example of the optimism and confidence with which we Cubans see a socialist and prosperous future.”

The Mariel upgrade, at a cost of around $900 million, is the largest infrastructure project for Cuba in decades. With financing from Brazil’s government, it amounts to one of the communist country’s biggest bets yet on global capitalism.

Analysts said it was an ambitious effort intended to establish tighter economic ties with Latin America and Asia, while preparing for the eventual end of the American trade embargo.

“In the short term, it’s based on the special relationship that Cuba is building with Latin America and East Asia,” said Arturo Lopez-Levy, a former Cuban official who studies Cuba’s economy and politics. “In the long term, they are planning for a soft landing with the United States.”

The port has the capacity to handle 800,000 containers a year. Port officials said that in term of its sophistication, it was already on equal footing with Kingston in Jamaica and Freeport in the Bahamas, two of the Caribbean’s busiest ports.

The port, with dredging that will eventually reach depths of nearly 60 feet, will also be able to support the largest cargo ships coming through the upgraded Panama Canal.

Cuban officials have said they hope Mariel will become a regional hub, with large ships docking here, breaking up their loads to efficiently deliver products across Latin America and the Caribbean. In his brief speech at the port’s inauguration, Mr. Castro also argued that the port would lead to greater exports and a stronger economy.

Mariel’s Special Development Zone, 180 square miles of what are now grassy fields overlooking the wharf, will most likely be a major test of whether such promises can be fulfilled.

For a country that has enacted limited free-market overhauls with clenched teeth, the rules in the Mariel zone are exceptional.

While foreign firms elsewhere on the island can operate only as part of joint ventures with Cuba, which typically maintains a majority stake, here in the Mariel zone, they can be 100 percent foreign owned.

Construction and possible factory jobs are expected to be filled by Cuban workers, but outlines of the project suggest that foreign companies will be treated to generous tax breaks and less bureaucracy than is usual in Cuba.

Ms. Rousseff, the Brazilian president, making her second visit to Cuba to attend a conference of Latin American and Caribbean leaders, said Mariel’s new port would benefit Cuba and the region.

Praising Cuba for encouraging “dialogue and cooperation,” she criticized the American trade embargo and noted that with Mariel, “there are great possibilities” still to be realized.

The Mariel upgrade, at a cost of around $900 million, is the largest infrastructure project for Cuba in decades.

Todd Heisler / The New York Times

Interest in the development zone is difficult to gauge, but analysts report that companies from several countries — including China, Malaysia and Angola — have expressed an interest.

In a sign of Cuba’s willingness to let the port stand apart from the state-run economy, Mariel will be administered by PSA International, a port operator based in Singapore. Several of the port’s advisers, guiding reporters through presentations Monday, come from Europe.

“It’s a very substantial, very serious project,” said Philip Peters, a Cuba analyst at the Lexington Institute, a libertarian think tank in Washington.

“It has an integrated commercial strategy attached to it: It’s big in the context of the Cuban economic reforms.”

The port, having changed from a launching point for rickety boats full of migrants, may also set a broader precedent. Cuban officials have said that a new foreign investment law will be unveiled in March, and there have been hints that some of the looser rules governing Mariel’s development zone could be a part of the plan for at least some struggling sectors of the economy, such as agriculture.

Mr. Lopez-Levy, who also works with a group of Cuban-Americans favoring engagement with Cuba, said that Cuba was hoping to mimic China by creating enough economic growth to blunt demands for political change.

Though many Cuban-American leaders in Congress disagree — arguing that a hard-line stance against Cuba best serves Cuban and American interests — Mr. Lopez-Levy said that by maintaining the embargo, the United States was essentially giving Cuban officials what they wanted: the ability to exercise greater control over the pace of change.

“If you let them do it in the way they want, piece by piece, they will be able to create the type of market economy they are building now,” he said. “What they want is a soft landing period, and then at some point, they will be able to manage the Americans when they go in. This is all part of their design.”